I like the idea of being able to rent bikes, and they seem to be getting good reviews in the technical sense (except from Foglia). But the high subscription rate and exponentially-increasing use rate make me wonder what kind of person would use this system and how.

As Foglia says, tourists will be easily turned off by BIXI because the system is designed to discourage long-time use. You can’t take out a bike and bring it back a few hours later unless you want your wallet sucked dry.

Commuters, meanwhile, will find the annual subscription fee expensive. You can get your own (used) bike for $78 a year and do what you want with it. Besides, the BIXI footprint is small (I don’t even have one near where I live), and a lot of people will find they’re coming from or going to a place where BIXI can’t go (like NDG).

I just don’t get the exploding scale. It’s backwards to the way economics work. You want to reward customers for purchasing something in bulk, not punish them.

Something tells me a lot of people are going to be spending half their time checking their watches and looking for the closest BIXI station to top up their ride and give themselves another half hour free. As long as they keep bringing it to a station every half hour, BIXI users can keep the bikes for as long as they want.

Does that make sense?

Right now, we’re still in the honeymoon phase, with BIXI reviews from journalists who wouldn’t spend more than half an hour toying with it even if it wasn’t time-limited. We’ll see after this year (or maybe next) whether regular people will find a use for this service.

UPDATE: Just to clarify, I support the idea behind a bicycle-rental system, even one that is partially subsidized by the government. My issue is with the fare structure that uses an exponentially-increasing scale instead of one that uses a flat per-hour rate.

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37 thoughts on “BIXI’s economics don’t make sense”

I live downtown, I’m going to grab a beer with friends on a terrasse, most probably at the St-Sulpice. I’ll take the bixi down my street, drive to the St-Sulpice. Around 25 minutes and leave it at the nearest station. At the end of the night, I’ll probably take a cab or get a ride from a non-drinker home since I don’t want to drink and rive, even more on a bike where there is “balance” involve.

25 minutes of bicycle is not enough to make me sweat even in the hot MTL summer sun. and I got there for a few bucks.

I don’t have to be stuck with a bike on my way home and someone else can simply use it when i’m done. It’s a bit like Communauto, but for bikes.

My take on Bixi is “if it dosen’t make sense to you, you are not its target market.” I’m trying to stay positive. really trying.
I spoke to a trio of tourists yesterday who were gleefully riding Bixis down de Maisonneuve and that was a bit comforting. I just hope they found another bixi station with 3 empty spots somewhere down the road…

But honestly, the whole joy of a bicycle is its flexibility. No pesky bus schedules. No changing lines or calculating the nearest station. No circling around looking for parking. And Bixi nixes all of that…

And why would it work so well in Lyon, Rennes, and Paris, while here no one has a use for it? Is it simply the fare structure that puts you off, or the fact that it just started and there’s not many stations available right now?

It’s really the fare structure more than anything else. Lyon’s system has a flat rate after an hour of use, and while Paris’s does also climb illogically, it’s not quite as astronomical as the proposed BIXI system.

If the fees charged to rent the bikes were enough that the system made money, they would encourage people to take out the bikes for as long as they want and keep adding new bikes to the system to increase profits. But the bikes are way expensive, so the government has to subsidize the cost, increasing demand. So they have to have a backwards fare system to increase turnover.

It sounds a lot like a system that is meant more to look good than to be particularly convenient to anyone.

In the summer I never buy bus passes because I bike everywhere. But if I leave home in the morning and it rains, I’ll usually take the metro. If it’s nice out when I get home after work, then I can take a Bixi home and save a 2,00$ metro ticket.

Or if I have to stop by the Grande Bibliothèque on my way home, I would have to use two metro tickets… now I can use Bixi to get there, put the Bixi back, and get another Bixi afterwards, instead of paying 2 metro tickets.

But the BIXI subscription rate is $78 a year. Are you really going to spend that much on rainy-day return metro trips? That’s five trips a month for five months (May to September) before it’s worth your while, assuming you never use a bike for more than a half hour.

Well, the concept is really appealing to me because I don’t want to be bothered with a real bike, carrying upstairs to store it in my apartment (like I got the space!), worry about getting it stolen, worry about leaving it somewhere if I don’t want to use it for the return trip.

For me, it’s all about making those short trips more efficient.
During the summer, I go to the Fantasia Festival almost daily. I work 2 metro stations away from there. It seems ridiculous to me to take the metro when it’s so nice outside, but walking can sometimes take too long to make it to the flick after work. So I’ll grab a Bixi, follow Maisonneuve and leave it at Concordia, while taking less time than walking, most likely less time than the metro.
Same for in my neighbourhood, for shops that are 2-3 metro station equivalent away.

To be honest, I haven’t subscribed yet, because they don’t have stations north of Jean-Talon, and I live in Villeray. Next year, maybe? Then yes, I’ll probably double-check the costs and savings. I was just giving you ideas of situations when bike-owners would need a Bixi.

I’ll get to some of Steve’s criticisms of Bixi in a moment (really one criticism: that it’s too expensive), but a few things about Foglia first. I know the post only refers to a portion of his column, but the whole piece leads to a conclusion I can get behind, namely that op-ed columnists’ days are numbered.

What do we learn from Pierre Foglia? First, that he is not adept at successfully inserting a credit card into a machine. Second, that he cannot easily distinguish between red and grey indicators on a map. Not exactly the kinds of things most people would boast about, but, hey, ignorance is bliss. It’s hard to be the devil’s advocate here if you’re not sort-of intentionally rigging the game. Regardless, why devote three paragraphs to the swiping of a credit card. If not for you, Steve, I’d have quit right then and there.

Onward. Foglia’s basic point, I guess, is not that the brand new Bixi system suffers from some hiccups (shocker), but that it’s foolish, nobody likes it and who the hell would want to spend money to rent a bike anyway.

But my point isn’t that Pierre Foglia is a hack asshole who has to toss in some lame Internet meme to fill his column-inches. That’s not my point. I have better ones:

– First of all, his stance – that Bixi doesn’t make sense for enough people to be viable – rests on the notion that lots of Montrealers are suckers who can’t do math/price comparisons. At least he could have done a little work. Like, call Bixi and find out how many people have subscribed. Or hit up the Bixi facebook page and interview some users. Way to insult your readership, Pierre.

– Second, the idea that owning a bike is always superior to occasionally renting one (at a low, low marginal price) is something of a canard. Owning a bike in Montreal means having a relatively safe place to store it, ideally indoors. Owning a bike means you must always make round trips. Owning a cheap bike means heading down to a used bike shop and plonking down some money (I would wager more than $78, BTW) for what is likely a stolen bike (mental exercise: recall the number of incidents of people you know selling a bike; now compare with the number of incidents of people you know losing a bike to theft; draw a conclusion). Bixi allows you to plonk down some money (Communauto members get a discount of between $10 and 50%, depending on their plan – cross-marketing at its finest) and bike from point A to point B for a small fee. You’ve pointed out that the footprint is fairly small – I would bet most Bixi trips could be made within thirty minutes, meaning the average usage price of a trip will probably be way less than $1.50, the small cost of using a bike around town for an hour.

– Third, back to the round-trips for a moment. I live at the bottom of a hill. I work at the top of one. I’m not keen on biking uphill every morning. I’m not even keen on walking, but what the hey? I *am* keen on hopping on a bike at the end of the day and cycling home (well to one of the five Bixi stations within a five-walking-minute radius of my house). Or hopping on a Bixi to go from work to a softball game without committing to biking home later. Or zipping down de Maisonneuve to get from McGill College to Concordia in three minutes (faster than cars!). Bixi fills an interesting niche – getting from close points of interest around town quickly without driving.

– Last, there are some things Bixi is really not designed for, and I think the pricing structure accurately reflects that. Leaving aside membership, which I gather is designed to allow the system to eventually sustain itself, the usage fees seem reasonably priced to me. This is where we get into economics, the ultimate point of your post:

“I just don’t get the exploding scale. It’s backwards to the way economics work. You want to reward customers for purchasing something in bulk, not punish them.”

That’s true in many cases. Movie concession stands are a good example. You want to move volumes and volumes of soda, in part because Coca-Cola will show up on Monday with as much Coke as you need to replenish your stock. You don’t have to worry about selling out of Coke long-term. So you ding customers with a high small-size price, but since your costs are so low (since you’re selling basically water and logos), you entice larger volumes by reducing the per-unit cost on the larger items. Sure you’d rather sell two smalls than a large, but you really want to get as much money out of each customer as you can. It’s a fantastic way to get people to buy two liters of Sprite, or a double-cheeseburger or three tank-tops for the price of two-and-a-half.

But Bixi’s inventory is way more fixed than the Coke dispenser at the Paramount (or whatever they call it these days). You only have so many bikes and so many bike stations. So if you create an incentive for some users to take bikes out for three hours at a time, the others will be annoyed that they can never get a bike. The success of Bixi will depend considerably on inventory management. When I leave the office at the end of the day, there had better be a bike nearby, and when I get home, there had better be an empty spot. So how does Bixi get users to adhere to a high incidence of short usage (and a low incidence of long usage)? Well, their marketing stresses that it’s not designed for leisure, but for transit. Bur more importantly, they devise a pricing scheme that effectively punishes heavy users and rewards thrifty ones. Now the pricing can be adjusted if the incentives are working either too strongly or too weakly, but the general idea is exactly “the way economics work,” Steve: you use the price of a service to incentivize consumer behaviour. This is actually really crucial. Because if it were the same price to take a bike for three hours as it were for an hour, what would cause me to return the thing in a timely fashion so that someone else could use it?

So what could Bixi do better, five days in? Well, the faux blog garbage was pretty fucking stupid, as you’ve noted (and, to my surprise, it really turned off potential users; who gives a shit about evil marketing, or, rather, who is surprised by it?). More importantly, the website has been plagued with issues, some technical (it’s down, sort of, for some people, all the time) and some design. Specifically, the real-time map of stations, which shows bike- and bike-slot-availability, is a Google Map (cool; it looks nice) that uses a Java script that is pretty slow – especially on a wireless handheld device, i.e., exactly what you would use to check the nearest station with free spots when you’re looking to dump the bike. While somebody cooks up an iPhone/BlackBerry/WInMo app, a text-based or mobile website would do wonders, as would a proliferation of system maps on the bike stations (though this can get complicated as stations are moved/added/subtracted). You could conceivably have a text-based page in the My Bixi section where users can save their favourite stations, like the favourites on the STM iPhone app. Of course you can always call Bixi and ask them where to go (fuck you again, Foglia), but that’s not nearly as cool.

So far so good – I hope it delivers. It would be great if it takes off, makes some money, relies less on municipal handouts – those are reserved for the Zampinos – and expands across the island. And it would be even better if I never have to walk home from work again.

“Because if it were the same price to take a bike for three hours as it were for an hour, what would cause me to return the thing in a timely fashion so that someone else could use it?”

I’m not arguing that it should be a flat rate, but that the rate per hour should be flat. So if you use it for three hours, it should cost three times as much as an hour. Under the current system, the second hour costs six times as much as the first.

I think that what would keep the users returning bikes in timely manneris good etiquette, consideration for fellow users. Not high prices. High prices and stringent time limits bring on stress (just like parking tickets), making you hate the service. Not an emotional relationship one wants to have with the service.
It’s the same thing keeping one from vandalizing bikes, or spitting on handlebars, or knifing bungee chords (I haven’t figured out a way to hold a book on there yet, without a bag).

Furthermore, I think that it should reward users to use it on rainy days, say at 1 hr free. and 1/2 off. (isn’t that why they have mudguards?)

I think that the bixi as a product (bicycle) is fairly designed, with compromises taken at correct junctures.
However Bixi as a service and experience has a long way to go. Perhaps a free phone-in service, voice activated (or punch in dials for shortcuts) to check for spots. ‘Cause when my phone doesn’t have internet, and I’m at Atwater market (where i’d expect a spot) there is none. And without studying a bixi map by heart, I would only take it to places I know and HOPE there’s a free station, and if it’s busy, I’d be spending time biking around trying to find free spots.

But back to basics usability. Yes, after using it a couple of times, it may be ok to get used to it.
BUT I have punched the code, and got an Error. so did a couple when I was returning my bike. Perhaps the system is too slow and takes couple of more seconds to authenticate the code, BUT this should be more explicit (make the user wait at the checkout).
The buttons are not made like other buttons, nor are they inviting. Hence, before I got a password ticket I didnt even know they were buttons (and by the look of it some people dont know it even afterwards).
It says you can only get 2 bikes on 1 card. but is it 2 transactions? is it 1 code and 2 bikes? ???

It’s fairly intimidating for older users (40+)imo.
so far it looks and sounds that it’s intended for hipsters, and tourists.
Yet, tourists are excluded from the target group, leaving just hipsters.
And although it’s a big community, I think a service such as this will benifit (and benifit the city) if it was deployed in a different manner.

Same here – I wonder about the fare structure. I used the free bike system in Vienna quite a bit 5 years ago (no subscription fee, 1 hr free). Made sense, when it was too late for the metro or a short ride, when I was without my bike,.. . Here I will not use it, since the daily fee buys me two metro tickets anyway. I ride my bike 99% of the time and I do not have a bus pass.

I am also torn on the Bixi issue, because although I do own my own bicycle, I *hate* the hassle of trying to drag it up and down two flights of stairs and through my apartment, only to lock it up on the back balcony. Maybe this is a petty reason not to use the bike, but it’s genuinely a deterrant to my riding my bike, which makes Bixi an attractive alternative.

Of course, are there areny Bixi stations in Verdun? NO! So there goes that plan.

I do think that charging people an ever-increasing fee (if I’m not mistaken, it’s $78 for the year PLUS the $1.50 per one-hour?) is a bit ridiculous. If I pay $78 a year, I would expect to have a more unlimited time structure. Granted, it’s only a bit more than you’d pay for a monthly metro pass for an entire year of service, but let’s be honest: only truly hardcore bikers are going to use Bixi during the winter months (actually, is there any guarantee that Bixi will allow users access to the bikes during the winter?), which means we’re getting, what, 3 months for $78? And you still have to pay for anything over half an hour. Is this really a deal?

I haven’t worked out all the math, as you can see, but given that there are still no points of service in my ‘hood, it doesn’t really make sense for me to use this system right now. And if they don’t even have stations in NDG, then in my opinion, they’re REALLY doing it wrong.

Forgot to put my name and email earlier – didn’t mean to be anonymous.

Your point is kind of misleading, since the second half hour is times the amount of the first. Anyway, the idea is to use the price to incentivize behaviour, and I guess an escalating price would more likely do that than a flat half-hour fare.

I think the novelty of the system is what is putting a lot of people off.

But having lived in a city where this kind of bike share is ubquitous (Lyon), I can assure you that the the reasons for BIXI are valid.

To address the exponential increase of price after each hour, it is solely to ensure that the bicycles remain in circulation. That someone doesn’t ake the bike on a « 3-hour tour » or simply parks it outside their office while they are at a meeting. The bike is really just to get from point A to point B and then continue on with your day.

When I first arrived in Lyon, I too thought the system to be ridiculous. Until I finally one day decided to subscribe (they were doing a blitz in the square near my house). For 5 (!) euros a year, I had access to the system. Each morning, I would take a bike from the station outside my apartment, ride it to the metro station, ride the metro across town, exit the metro and take another bike to my place of work. And that, my friend, is the beauty of a bike share program over having your own bike.

Now, if only the price (78$) were not so high. I don’t think it should be more than 20. And we shouldn’t think of BIXI as something that should generate a profit, but as a piece of transit infrastructure. We don’t ask the métro to turn a profit. We don’t expect bridges to turn a profit. Rue St-Urbain doesn’t turn a profit…

How do you get to no “more than 20”? Why set a target price without having any clue what the costs are or what the market is like? We may not expect the Metro to turn a profit, but Bixi is not quite in the same transit league as more established forms of transit, and it won’t be for a while. There’s only so much a broke-ass city like Montreal can invest in a bike-sharing scheme, and bearing a larger share of the upfront, startup costs is the kind of thing only the public sector can do well. Ideally, Bixi should generate enough revenue to cover cover its costs. Any profits should enable either expansion (as a number of people have noted, the footprint is rather small for now and there’s lots of room for growth) or reduced fees, though this is a bit of a minefield. As I’ve written already, too low fees can lead to Bixi becoming a victim of its own success, and could ruin the service. Moreover, time (and careful study) will tell whether the Bixi fees actually pose a serious barrier to those who would sign up but can’t afford it. Given that the annual fee can be reduced to under $40 if you commit to buying a year’s worth of bus passes and that the first half-hour is free, my hunch is that Bixi is pretty affordable. It’ll sink or swim on ease of use, not price. Think of it another way – you can either pay for a non-essential but useful public good like Bixi as a user (well, pay for part of it anyway) or spread the cost among all taxpayers. Either way you the citizen are paying for some of it – the question, then, is how much of a bike-sharing service should be funded by non-users? Given the low footprint (and two other facts, that it’s just impractical for many, many people, and Montreal taxes are already pretty high), Bixi will need to rely on a cost-share model.

My only hesitation regarding the fare structure is that the short time-limit is too short by half.

In Europe, cities are much denser, and a half hour is a reasonable amount of time to get almost anywhere at a leisurely speed.

Montreal is about half as dense, and can’t really be traversed in 30 minutes.

Perhaps if the first hour (or 45 minutes) was free-for-subscribers, and then the scale was adjusted in one-hour increments, this would suit the local environment better.

One other improvement that needs to be made to suit Montreal’s particularities is the speeds. Three speeds isn’t really enough to cross the city north-to-south. This will prove a major liability when it comes to getting non-cyclists to use these bikes regularly.

So I would suggest the first hour be free, and that the bike be redesigned to have five or six speeds.

I think you may be right eventually, if the Bixi territory expands to cover more of the city. In the meantime, I think 30 minutes is enough to cover most A to B destinations. The other day I went from Laurier metro to William street in Old Montreal. Taking an indirect route (biked up to Jeanne-Mance park before cycling around and then down St. Urbain), I made the trip in 23 minutes. Of course inclines, etc., will prolong trips, but 30 minutes is reasonable for now. I like the idea of extending it to 45 minutes for yearly subscribers.

As far as the speeds go, I see your point. Then again, I’m not sure how easy/affordable it would be to change all the bikes (I’m so not a bike gearhead).

The current service area in Montreal is reasonably covered with a 30 minutes free period. It’s a bit of a hassle if you need more time… But it’s only a 5 minutes wait for the next free 30 minutes. I’ve used my bixi account a bit and my longest trip was 23 minutes… And almost 10 of those minutes were spent cycling around Mile-End because they’ve only got 2 stations there right now and the paper map lists about 12…

I’m divided so far. I love the concept and the design and the fast and extensive roll out has been impressive. I’m a regular bike commuter in the summer and so need to own my own bike. I can’t see Bixi replacing that everyday need. I have however used the Bixi twice so far on occasions when I found myself out without my bike and would rather cycle home then stand around for the ridiculously long Montreal bus wait times (30-40 minute wait times on Sherbrooke street at night? Come on.). For a one trip use $5 did seem steep though. I also used the Bixi once when my bike was in the shop and found it perfect for running errands around downtown. I used the bike four or five times during the day and so $5 seemed like a reasonable price.

I am a bit confused by the pricing scheme. If they really want to encourage bike use amongst the general population (rather than attempt to recoup their costs), then the price is too high. A $3 a day, $20 a month and $60 a year pricing scheme would seem just about right as far as my use is concerned.

Just a quick comment concerning the false impression people seem to have that bike’s cost almost nothing. For a decent used commuter-use bike, you need to spend around $150, plus maybe $30-50 for a good lock. On top of this there are substantial repair/maintenance costs to operating a bike on a regular basis. So far this year, my bike has required about $20 in basic maintenance (inner tubes, patch kits, small parts…), $50 to replace a rear wheel that was vandalized, and $25 to replace a seat that was stolen. So when you look at these kind of normal costs, the Bixi starts to make more sense.

I have made my annual subscription and have been riding the bixi every day to and back from work. It takes me 20-25 min each way. I find it great, as if it is raining, I can just take the metro. I have replaced my opus card by the bixi, and my annual subscription will pay off in a month, ie. I paid $78 for the season, whilst I would spend $66 for a single month with stm. Even if I have to spend a few metro tickets, in only two months it is still cheaper.

I live close to Parc Lafontaine and work downtown, I don’t want to own a car (to avoid winter troubles), so with Bixi I can go anywhere I usually go (including nigh outs) enjoying a nice bike ride instead of being in a crowded bus or a noisy metro.

The press and the blogosphere have been giving Bixi such a bad press. It is normal to have hick-ups at any start-up. I guess we should have more patience and improvement will most certainly come.

On the other hand, to be a real Montrealer, Bixi will of course have to expand its coverage, which is rather limited today.

– Yes, I could buy a bike, but then there is a 50% chance it will get stolen within a year.

– I can bike down Parc to get to work in the morning, and if it’s raining or I’m just lazy I don’t have to bike up to go home, I’ll just take the bus. Same for going for drinks, get there by bike, and then cab it home if I’m too drunk to ride!

I bought a year subscription to BIXI and thus far I have to say I am very pleased with it. I have read many comments and media reports over the last few weeks and have been dismayed by the negative response of some. Most of the negativity seems to come from people who either have never used the service, or tried it once as a curiosity yet have no intention of using it on a regular basis. I suspect also that many of the journalists and bloggers writing about BIXI don’t even live in an area that is serviced by BIXI. All the stories I hear about huge deposits charged on credit cards, or people who rented the bike for 4 hours and got charged for it, are not typical of the target BIXI user. It’s unfortunate that the first question I get asked about BIXI is “How much did they charge you?” or “I heard it’s a rip-off”. I agree that at $5 a day, it’s a little steep. But if that’s keeping you from trying the service, or if you are happy travelling on your own bike, then BIXI will remain a novelty to you. You really to use it on a regular basis, and live in an area where it is available, in order to understand how convenient it is.

Anonymous nicely outlines the rationale behind the pricing structure. I have yet to take a trip that lasted more than 30 minutes. I can get from my place near Fabre metro to downtown within that time period. If I needed the bike for longer, I would just park it, wait five minutes, and grab it again. BIXI is not a bike rental service. It’s a form of public transportation that nicely compliments the metro and bus system. Just like commuter train clients pay more to travel longer distances, BIXI users pay more to keep the bike longer. Also like the STM system, it’s more economical to pay for a monthly or yearly pass. Plus, as a transit user, I will get a 50% discount on BIXI, so basically I’m paying $34 (tax incl) a year for a bike at my disposal any time I want. Think about how much you spent last time you went out to dinner/bar and tell me that’s not a pretty good deal Plus;

You can bike home late at night after the metro is closed and save on cab fare
As anonymous said, you can bike downhill and metro/bus uphill
You can switch between bus/metro/bike/walking as the weather dictates
You can bike somewhere, change your plans later and not worry about how to get the bike home
You avoid lugging a bike up and down stairs
You get piece of mind not worrying about your bike being vandalized/stolen
No bike maintenance/replacement costs
You bike more often

Basically, it’s gives you a freedom of movement and choice of transportation modes. It’s liberating.

I think that once the system expands geographically and the committed user-base increases, the general population will accept BIXI as a viable alternative means of transportation. Of course there will be people who don’t understand the system and who will not use it. There are also many people who drive cars and never use public transit.

I agree with most of your points, but I still take issue with the exponentially-escalating rental price. The AMT’s rates don’t escalate exponentially the farther out you go. They go up in a linear fashion as you would expect.

You still don’t get it.
They have 3000 bikes and Montreal has two million people.
If a bike is used for half an hour, it could easily be used 20-30 times a day.
In total we have transit for 60-90,000 people. That is a potentially a lot of cars off the streets.
If you want to rent a bike for the day, go to a rental bike shop.
It is a different business.

The reason why BIXI has had such a rate of success in montreal is that most oeople have yet to receive their credit card statements. With a blatant lack of clarity many people I have spoken to were under the impression that a daily bixi rental is $5.00 a day. Usage will drop dramatically once they realize that their rental was actually a whopping $51.50.

Anybody here willing to revisit their initial assessments of Bixi made so early in its deployment? I think it’s fair to say Bixi has been an incredible success and won’t be disappearing from our streets anytime soon. The only question now is, how big will it get and how far will it expand.